- Equity sell-off weighs on greenback
- Treasury yields fall and oil prices remain steady
- US dollar is trading with losses across the board.
USDCAD open (6:00 am): 1.4021, overnight range 1.4014-1.4050, close 1.4047, WTI $99.43, Gold $4,087.47.
The Canadian dollar is grinding higher for a sixth straight session. WTI flirting with $100 a barrel lends a hand, as does the narrowing gap between Canadian and US interest rates, but the real heavy lifting is coming from a broad-based sell-off in the US dollar.
Prime Minister Mark Carney and Ontario Premier Doug Ford rolled out an $8.7 billion counter-tariff action plan aimed at shielding key industrial supply chains from US tariffs and global trade turbulence.
WTI traded in a $97.75-$100.08 band overnight, with ongoing Middle East hostilities putting a floor under prices. The US EIA reported a 3.06 million barrel drawdown in crude inventories last week.
A global equity market sell-off as led to a bout of risk-off trading but because of the upcoming US mid-term elections, the Japanese yen was the preferred safe have destination, not the US dollar.
Asian equity indexes took a beating. The Hang Seng lost 3.0% Japan’s Topix shed 1.14% and Australia’s ASX 200 slipped 0.43%.
As of 7:45 am, the French CAC-40 is down 1.24%, Germany’s Dax has given up 0.84% and the UK FTSE 100 is off 0.33%. S&P 500 futures are down 1.03%, the US 10-year yield sits at 5.044%, and the DXY is at 101.81.
EURUSD topped out in Asia and has been sliding ever since within a 1.1202-1.1256 band, landing at its session low as NY gets going. The mood has turned sour, with heavy equity losses in Asia, softer European bourses, stubborn energy prices and French budget jitters all piling on.
GBPUSD has been digesting this week’s gains in a 1.3362-1.3419 range, though it has backed away from its overnight high. Yesterday’s UK inflation numbers are doing the heavy lifting, having all but locked in a November Bank of England hike. Cable is also getting a helping hand from EURGBP selling.
USDJPY slumped through a 156.69-158.25, a fresh one-month low, courtesy of softer US Treasury yields and an equity rout that sent investors scurrying for the safety of the yen. Adding to the story, the Nikkei says it has learned the Bank of Japan will sit on its hands and keep rates at 1.25% at the October 30 meeting.
AUDUSD lost ground in a 0.7007-0.7037 range as a broad wave of US-driven selling pressure drowned out the RBA’s hawkish rate outlook. That outlook got a boost yesterday when RBA Deputy Governor Andrew Hauser cautioned that Q3 trimmed mean inflation could come in hotter than forecast, which keeps a November 3 hike firmly on the table.
The Canadian calendar is empty today. In America, initial jobless claims (expected at 200,000 versus 199,000 previously) and the Conference Board leading index are due.
